Case Shiller Finally Looking Better

The prices of single-family homes in 20 major cities rose 1.4% in June,Thats two in a row. After three years of declining prices its a welcome reprieve. Prices rose in 18 of the 20 cities in June. I dont think of this as recovery yet, what we have is a bad situation looking a little better, but prices and growth are still negative. Its not exactly party time. Reminds me of a Billy Holiday tune....I been down so long it looks like up to me

Price Action

Homes down 15.4% year over year but better than the 19% year over year drop in January and own 31% from the crest of the bubble topping out in 2006. More foreclosures and problems in the commercial sector will keep the lenders on the margins and without them either the Govt steps up with more stimulus or we will have a few flat years.

70% of our economy is Consumer driven and we arent ready or able to step up. The job loss spooks all of us and the fear of catching a falling knife is very strong. Besides, we arent as rich as we were.

What Does Shiller Have to Say

He is impressed with the turn around, but very cautious. Job loss, more foreclosures and a commercial property mix that is now as big a loan problem as homes. The commercial problem will continue to play out through 2010. Between now and 2012 most of the commercial loans made during the boom, when prices were at their highest, w2ill need to refinance. I cant imagine the banks are very happy to oblige. With the banks looking at large future loans, its fair to expect tight credit and this will keep growth low and slow. There are a few good articles on the apartment sector here